The last year or two has seen a deluge of Fed speakers pay lip-service to watching/monitoring/keeping-an-eye-on potential bubbles... but as yet having found none... That is all except one - Jeremy Stein - who explicitly called out high yield bonds as in a 'frothy' bubble last year... it appears he has grown weary of smashing his head against that wall...
- *FED SAYS STEIN SUBMITTED RESIGNATION LETTER TO OBAMA
- *YELLEN SAYS STEIN WAS 'AN INTELLECTUAL LEADER' ON FED BOARD
Stein plans to return to teaching at Harvard but in his resignation letter noted that more work is needed on the job market and that the financial market needs strengthening.
One of the most difficult jobs that central banks face is in dealing with episodes of credit market overheating that pose a potential threat to financial stability. As compared with inflation or unemployment, measurement is much harder, so even recognizing the extent of the problem in real time is a major challenge. Moreover, the supervisory and regulatory tools that we have, while helpful, are far from perfect.
Waiting for decisive proof of market overheating may amount to an implicit policy of inaction on this dimension
Stein's resignation letter...
Dear Mr. President:
April 3, 2014
MEMBER OF THE BOARD
I am writing to let you know that I intend to resign as a member of the Board of Governors of the Federal Reserve System on May 28,2014, and return to my teaching position in Harvard University's department of economics.
It has been a great privilege to serve on the Federal Reserve Board. During my time here, the economy has moved steadily back in the direction of full employment, and a number of important steps have been taken to make the financial system stronger and more resilient. There is undoubtedly more work to be done on both dimensions.
But under the leadership of Chairman Ben Bemanke and Chair Janet Yellen, and thanks to the efforts of our colleagues on the Federal Open Market Committee and around the entire Fed system, much progress has been made as well. Working alongside these talented and selfless men and women has been an extraordinarily rewarding experience.
I am grateful to you, and to the Senate, for having given me the opportunity to be involved with ·these remarkable people and this special institution.
And The Fed's farewell note...
Jeremy C. Stein submitted his resignation Thursday as a member of the Board of Governors of the Federal Reserve System, effective May 28, 2014.
Stein, who has been a member of the Board since May 30, 2012, submitted his letter of resignation to President Obama and plans to return to his teaching position in Harvard University's department of economics.
"Jeremy has made important contributions and served as an intellectual leader during his time at the Board," said Federal Reserve Chair Janet L. Yellen. "His understanding of monetary policy and markets as well as his expertise in banking and financial regulation has proven invaluable in his service to the Federal Reserve and the country. My colleagues and I will miss him."
Stein, 53, was appointed to the Board by President Obama to fill an unexpired term that ends January 31, 2018. During his time on the Board, he served on the Committee on Bank Supervision and Regulation, and as co-chair of the Financial Stability Board's Official Sector Steering Group on reforming interest-rate benchmarks. This international group of regulators has been charged with developing alternative reference rates and transition strategies in the wake of the well-documented problems with LIBOR.
While at the Board, Dr. Stein has been on leave from his position as the Moise Y. Safra Professor of Economics at Harvard University, where he taught courses in finance in the undergraduate and Ph.D. programs. From February to July 2009, Dr. Stein served in the Obama administration as a senior adviser to the Secretary of the Treasury and on the staff of the National Economic Council.
Before joining the Harvard faculty in 2000, Dr. Stein taught finance at the Massachusetts Institute of Technology's Sloan School of Management. Prior to joining the MIT faculty, Dr. Stein was an assistant professor of finance at the Harvard Business School from 1987 to 1990.